Before the Affordable Care Act and Montana passed Medicaid expansion, Medicaid did not cover the very poor unless they were disabled or had children under the age of 18-years-old. This left tens of thousands of Montanans below the poverty line uninsured. Additionally, Medicaid did not take care of older adults who were under 65 unless they qualified due to a disability, meaning that low-income seniors between 50-64 often did not qualify for Medicaid.

In exchange for the federal funds, states must meet federal standards that reflect the program’s role covering a low-income population with limited resources and often complex health needs. The federal standards largely focus on requiring states to cover certain groups, such as poor children and pregnant women, as well as certain core benefits.

However, states can choose to cover additional groups, offer enhanced benefits, and already have wide latitude over many aspects of the program, particularly how they pay providers and structure their delivery systems. States can use Section 1115 waiver authority to vary from the federal standards and state options to address different priorities and emerging issues.

The programs across states vary widely in terms of who is eligible, what benefits are covered, what premiums and cost sharing are charged, and how providers are paid and care is delivered.

MYTH #3: Medicaid expansion can be protected if the phase out of the higher federal match occurs over several years.

FACT: Any phase-out of the higher federal match for Medicaid expansion will end Medicaid expansion in Montana.

The House-passed AHCA eliminates the higher match of federal funds for those who would be newly enrolled after 2019. The Senate is considering a longer phase-out, but to be clear: this has the same effect. CBO estimates that more than two-thirds of those enrolled in the Medicaid expansion would fall off the program within two years and that fewer than 5 percent would remain on Medicaid after six years. For those who see their income drop after phase out, the state would not receive the higher match and would most likely no longer be able to afford to continue to provide Medicaid to this population.

Nearly half of working Medicaid enrollees are employed by small businesses, and many work in low-wage industries that do not offer employer-paid insurance. Since the majority of Medicaid expansion enrollees are low-wage workers, Medicaid expansion prevents them from falling into the coverage gap; it helps them cope with high turnover in the low-wage labor market.

Medicaid expansion and the tax credits and subsidies under ACA provide a smoother transition to private Marketplace coverage. This has been particularly important for Montanans living in rural communities, accessing Medicaid and insurance on the marketplace at a greater rate. When their earnings rise or they get a new job, they can transition to employer coverage or the ACA marketplaces. Under ACA, the tax credits and subsidies provide significant support to lower costs for marketplace coverage. And families have the security of knowing that Medicaid will be there for them again if they lose their job, see their hours cut, or face financial crisis. Additionally, when they no longer qualify for Medicaid but live at 139% of the poverty rate, individuals can currently qualify for a tax subsidy to help pay the health insurance premium.

By eliminating Medicaid expansion and cutting tax credits for low-income families, the AHCA (and likely any iteration from the Senate) will create a situation where many families may have to choose between employment and keeping health insurance. For example, a family who earns $20,000 in Montana will see their premium paid after tax credit rise by 295% for a total of $3,690. That is the equivalent of 15% of that family’s income.